The ink wasn’t even dry yet on the European bailout fund, the EFSF when it paid $1.3 billion to bail out Proton Bank in Greece. Turns out, Proton had siphoned off $1 billion in a scheme of fraud, embezzlement, money laundering, and offshore front companies, according to the Süddeutsche Zeitung. And then a bomb exploded.

The bomb, fabricated of dynamite, demolished four cars in front of a building in Halandri, a suburb of Athens. Not a coincidence: in the building lived a senior employee of the Bank of Greece, whose meticulous investigation of Proton Bank had exposed the massive criminal scheme. According to the police, the bomb was intended as a warning to those who attempt to shed light on these kinds of machinations.

Founded in 2001 as an investment bank, Proton Bank expanded rapidly, was listed on the Athens stock exchange in 2005, and was then acquired by private equity funds. In 2006, Proton acquired Omega Bank. In 2008, Piraeus Bank acquired 31% of Proton. In late 2009, a guy named Lavrentis Lavrentiadis bought that 31% stake from Piraeus Bank. As Proton’s largest shareholder, he became its president. He also had interests in pharmaceuticals and the media and was the majority owner and president of Neochimiki, a manufacturer of detergents headquartered in Athens. By March 2011, he’d sold down his stake to 15% as the value of the stock collapsed. Chairman of the board was former US Ambassador Daniel Speckhard.

Ever the active under-40 entrepreneur, Lavrentiadis and some partners also founded a financial institution in Lichtenstein, Lamda Privatbank AG, which they capitalized with 25 million Swiss franks. He was its first client and majority owner, according to Schweizer Banken Info. Lamda, which began operating in November 2010, attempts to inspire confidence today on its sparse website: “We manage your portfolio with competence and a strong sense of responsibility as we know your lifetime achievements are behind your assets.”

Lavrentiadis is one of the main suspects of the Proton investigation.

On October 10, the Greek Finance Ministry, on advise from the Greek Central Bank, took over and recapitalized Proton Bank with €900 million ($1.3 billion) from the Financial Stabilization Fund, which is part of the EFSF. However, the Bank of Greece had been investigating Proton for some time and was compiling a report of several hundred pages that contained a plethora of details, tables, and lists of suspicious transactions with offshore front companies. While their names were evocative—Gold Valley, Blue Island, Bayland, or Beauty Works—their owners remained elusive. And its credit committee approved €357 million in high-risk loans to newly formed companies, such as Rovinvest or Cyprus Properties, and to offshore companies, though the bank had little or no information on them.

Exactly the kind of machinations and capital transfers that contributed to the current crisis in Greece. And the timing was symptomatic: while Proton’s euros left the country for greener pastures, Greece was already getting bailed out. And when Proton’s scheme collapsed, it too got bailed out.

Now the money is gone. The ministry of finance will split the bank into a New Proton Bank that will continue to do business with existing capital. The rest will be liquidated. The Greek government will try to go after the assets of Lavrentiadis and his six coconspirators, insofar as their assets are still in Greece.

Meanwhile, Lavrentiadis counterattacked, accusing the Greek government of violating the constitution by taking over his very favorite financial institution without first listening to him.

The whole affair raises the question why a Greek bank that engaged in criminal activity should get bailed out by international taxpayers, including those in the US (via the US contribution to the IMF). Particularly galling: the Greek government knew of the criminal activity before it asked for the bailout funds. Another line item on a long list of financial institutions whose reprehensible activities took the taxpayers to the cleaners.

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